Management Challenges for the 21st Century
Chapter 8: The Public Utility Marketing Challenge
For most of the history of the public utility industry, marketing was an uncomplicated, straightforward process. Most integrated utility providers were interested in increasing overall demand for their product. Generating facilities were large in order to beneﬁt from economies of scale, often resulting in an oversupply of product. Rates were controlled by legislative agencies; price competition did not exist. Most customers were charged a ﬂat rate for the product or service, regardless of the amount used. Marketing consisted of encouraging existing customers to use more of the product, or of expanding by moving into new market territories. State laws required utilities to serve all customers; growth from normal population and economic growth taking place in the existing service area was generally slow enough for utilities to meet and exceed all requirements for service. The utility business was considered to be a slow, steady, safe, and undramatic business. Assuming that you knew what you were doing and did it reasonably well, proﬁts were ‘guaranteed’ by law in the form of stateapproved ‘fair’ rates of return on investments. In the few spots where integrated utilities still exist, this level of marketing still functions. It is, however, rapidly dying out, and utility marketing now includes activities related to risk management. Beginning in the 1970s, the nature of the utility industry’s marketing environment changed. A series of petroleum-based energy shocks spread throughout the industry. Government reacted by passing laws to conserve and search for more and new sources of energy. The term...
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